Item 1.01
Entry into a Material Definitive Agreement
Indenture
On March 21, 2019, Archrock Partners, L.P. (the Partnership) and its wholly owned subsidiary, Archrock Partners Finance Corp. (Finance Corp. and, together with the Partnership, the Issuers), completed a private offering (the Notes Offering) of $500,000,000 aggregate principal amount of 6.875% senior notes due 2027 (the Notes), along with the related guarantees of the Notes (the Guarantees).
The Notes and Guarantees were issued pursuant to an indenture (the Indenture), dated March 21, 2019, among the Issuers, Archrock, Inc. (the Parent), certain subsidiaries (other than the Issuers) of the Parent party thereto (collectively with the Parent, the Guarantors) and Wells Fargo Bank, National Association, as trustee (the Trustee).
The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors. The Notes and the Guarantees rank equally in right of payment with all of the Issuers and the Guarantors existing and future senior indebtedness.
Interest on the Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2019, at a rate of 6.875% per year. The Notes mature on April 1, 2027.
At any time prior to April 1, 2022, the Issuers may redeem all or part of the Notes, at a redemption price equal to 100% of the principal amount of the Notes plus a make-whole premium plus accrued and unpaid interest, if any, to, but not including, the redemption date. At any time prior to April 1, 2022, the Issuers may also redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the net cash proceeds from one or more equity offerings, at a redemption price of 106.875% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, as long as at least 65% of the aggregate principal amount of the Notes originally issued on the issue date (excluding notes held by the Parent and its subsidiaries) remains outstanding after each such redemption and the redemption occurs within 180 days after the date of the closing of such equity offering.
On or after April 1, 2022, the Issuers may redeem all or part of the Notes at the redemption prices set forth below, plus accrued and unpaid interest, if any, to, but not including, the redemption date, beginning on April 1 of the years indicated below:
Year
|
|
Percentage
|
|
2022
|
|
105.156
|
%
|
2023
|
|
103.438
|
%
|
2024
|
|
101.719
|
%
|
2025 and thereafter
|
|
100.000
|
%
|
The Indenture contains covenants that will limit the ability of the Parent and its restricted subsidiaries, including the Issuers, to (i) make distributions on, purchase or redeem the Parents common stock or repurchase or redeem subordinated indebtedness; (ii) make investments; (iii) incur, assume or guarantee additional indebtedness or issue preferred stock; (iv) create liens to secure indebtedness; (v) sell or otherwise dispose of assets; (vi) consolidate with or merge with or into, or sell its properties to, another person; (vii) enter into transactions with affiliates; and (viii) create unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications. If the Notes achieve an investment grade rating from each of Moodys Investors Service, Inc. and S&P Global Ratings and no default under the Indenture exists, many of the foregoing covenants will terminate.
The Indenture also contains customary events of default, including (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes; (iii) covenant defaults, (iv) cross-defaults to certain indebtedness and (v) certain events of bankruptcy or insolvency with respect to the Parent or any of the Guarantors (including the Issuers). If an event of default arises from certain events of bankruptcy, insolvency or reorganization, with respect to the Issuers, the Parent, any restricted subsidiary of the Parent that is a significant subsidiary or any group of restricted subsidiaries of the Parent that, taken together, would constitute a significant subsidiary of the Parent, all outstanding Notes will become due and payable immediately without further action or notice. If an event of default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.
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